If you are like many residents in Illinois, you may find yourself facing a large federal income tax bill that you are not able to pay in full by April 15. In situations like this, it is important to understand your options in order to avoid amassing a high level of penalties or interest charges that only make your already unmanageable tax bill even less manageable for you.
As explained by the Internal Revenue Service, taxpayers may enter into an installment agreement in which they make regular payments to the IRS over a period of time in order to satisfy a tax debt. These agreements require that the original tax bill be paid in full by the end of the agreement term. Some people, however, are not able to do this. In these situations, you may want to investigate the Offer in Compromise.
An Offer in Compromise is an agreement on the part of the IRS to accept a payment amount that is less than the originally owed tax amount. This may be approved in cases in which forcing full payment would be deemed unfair to the taxpayer because of some unusual circumstances. It may also be approved in cases in which the IRS does not believe it would have the ability to collect the full amount due. Cases in which the person’s liability for the tax is questioned may also qualify for an Offer in Compromise.
If you would like to learn more about your options for addressing unpaid tax liabilities when you may be experiencing financial challenges, please feel free to visit the Offer in Compromise page of our Illinois tax law website.